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AUTOMOTIVE ALUMINUM The obsession with lightweighting ensures a ticket to ride

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Aluminum producers are bullish on the automotive sector as the drive toward "lightweighting" continues to pick up speed.

"We have more automotive programs and developments going on now than ever before," said Lloyd A. "Buddy" Stemple, vice president and general manager of Atlanta-based Novelis Inc.'s North American Specialty Products Group.

Indeed, automakers are so enamored with aluminum that Novelis likely will have to expand to keep pace with demand. "With the current rate of product development, we will need to add capacity to keep up with the lightweighting needs of our customers," Stemple said. "You just have to look at the number of programs announced in the last 12 months." From supplying hood sheet for the GMC Acacia, BMW X5 and Cadillac STS to being chosen as the lead supplier of sheet for the stunning new Audi R8, 2007 has been a banner year for Novelis automotive operations.

Novelis' automotive demand growth in aluminum is coming in areas like automotive structure and body panels, although the company also supplies a significant amount of aluminum components for heat exchangers. The growing use of aluminum is being driven by several factors, according to Stemple. "It's a solution for fuel economy, safety and environmental issues," he said.

Novelis' Fusion process for creating multi-alloy sheet without traditional cladding is driving further opportunities for the company. "Fusion opens that window significantly," Stemple said, noting that the superior strength and flexibility of Fusion sheet is ideal for automotive applications.

Alcan Inc., Montreal, now officially Rio Tinto Alcan, also is benefiting from growing automotive operations. "We expect significant growth in this area, which is generally exceeding double the rate of the industry as a whole," a company spokeswoman said.

Aluminum usage in European cars rose to 132 kilograms (291 pounds) per vehicle in 2005 from 50 kilograms (110 pounds) in 1990, the company said, and is projected to increase another 25 kilograms (55 pounds) by 2010. Automotive aluminum usage has been growing around 4 percent annually in recent years in four principal segments suspension and chassis; body and closures; bumper reinforcement; and engines.

The growth in bumper reinforcement is one of the more notable examples for aluminum penetration in the past five years in Europe, and is now taking off in North America and China as well. Growth also is coming from suspension and chassis components. Alcan has doubled production of forged suspension arms and links during the past four years, it said, and it sees very attractive growth rates for this segment going forward. Aluminum wheel sales also are growing steadily outside Europe, and the metal is winning market share from both steel and copper in heat exchangers, and iron in cylinder blocks and heads, the Alcan spokeswoman said.

Both Novelis and Alcan are closely involved with automakers in developing aluminum solutions as lightweighting demands become more complex and comprehensive, the companies said.

"In most projects, we are involved right up front with the conceptual idea when an original equipment manufacturer (OEM) decides lightweighting is needed," Stemple said. "A lot of time and money goes into design and development, including research, computer-aided design (CAD) drawings and alloy development."

Alcan is similarly involved in the development process. "Alcan has the largest research and development center in Europe," the company spokeswoman said, citing several joint development agreements that Alcan Specialty Sheet has signed with key customers, including Valeo and PSA Peugeot Citroen SA, both based in Paris.

Meanwhile, Alcoa Inc., Pittsburgh, which is selling its automotive castings business, still sees opportunities in the automotive segment. "We remain fully committed to the automotive sector, from forged wheels to our structures business," a company spokesman said. "The amount of aluminum in cars has been growing for 30 years and will continue to do so."

Among the company's most recent projects are the doors on the new Nissan GTR. In addition to Alcoa's design, the doors will utilize Alcoa sheet and forgings and even bear the company's name. Alcoa also is supplying high-performance forged wheels for the new Shelby Mustang, putting the company name alongside one of the icons in American automobile folklore. "Alcoa designed the wheels working together with Carroll Shelby (the legendary auto designer)," the spokesman said.

Alcoa's sale of its castings business should be completed by the end of this year, he said. "The castings business did not achieve the returns we wanted and would not without significant investment," the spokesman said, and the company had concluded that the unit would fare better as part of another organization.

Castings is the forté of Tenedora Nemak SA de CV, San Pedro Garza García, Mexico. The company, a unit of Mexican industrial conglomerate Alfa SA de CV, spent nearly $1 billion in 2007 to acquire the castings business of both Norsk Hydro ASA, Oslo, Norway, and Teksid SpA, Crescentino, Italy. Nemak also is increasing remelt capacity at its Monterrey, Mexico, facility to expand overall production capacity.

"We see potential growth in the market with our current acquisitions, as well as in other developing economies in the near future," a Nemak executive said. "Nemak will continue to add the required capabilities to address market needs and the company's vision."

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